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State sues for-profit university, alleges false promises

California's attorney general on Wednesday sued San Diego-based Ashford University and its parent company, Bridgepoint Education, alleging that they made false promises to entice students and engaged in unlawful practices to collect overdue debt.

State sues for-profit university, alleges false promises

California's attorney general on Wednesday sued San Diego-based Ashford University and its parent company, Bridgepoint Education, alleging that they made false promises to entice students and engaged in unlawful practices to collect overdue debt.

The suit, filed by state Attorney General Xavier Becerra, claims that the online school and Bridgepoint, a for-profit college chain, used illegal business methods to deceive and defraud students.

More specifically, the suit, filed in Alameda County Superior Court, asserts that school representatives lied to prospective students about how much financial aid they could get, the costs of attending the school, and about Ashford's ability to prepare students for careers in such fields as teaching, medical billing and social work.

“Ashford’s misrepresentations were not the actions of rogue employees but the consequence of the extreme pressure that Ashford exerted on its ‘Enrollment Advisors,’ also known as ‘University Advisors’ or ‘Admissions Counselors,’” the suit states.

The admissions counselors were more like salespeople who were measured by how many calls they made and how many applications they secured, among other metrics, according to the lawsuit.

It specifically recounts the experience of one supervisor in the admissions department who recalled, “I had worked in the sales industry for many years. But Ashford had the most aggressive sales floor I have ever seen … In short, the sales floor had a true boiler-room atmosphere, which reminds me in many ways of the boiler rooms portrayed in the movie ‘The Wolf of Wall Street.’”

In an emailed statement Wednesday, Anna Davison, Bridgepoint’s vice president of corporate communications, said the company plans to “vigorously defend” the case and is confident that it will be vindicated.

““Bridgepoint’s institutions serve as a model for how online education can better the lives of people who did not, or who were unable to, pursue more traditional avenues to degrees,” she said. “Thousands upon thousands of our current students and graduates can attest to the educational value provided by our undergraduate and graduate programs that have bettered their lives.”

The suit counters that many of the school’s 43,000 students who were low income were often saddled with unexpected tuition expenses and other debt. Becerra points out that to collect the money owed, Ashford would engage in aggressive and illegal practices like threatening and imposing unlawful debt collection fees.

“No school should ever steal the American Dream from its students, but that is exactly what Ashford University did,” Becerra said in a statement. “In today's economy, college is too pivotal and precious to let a predatory for-profit company swindle our daughters and sons out of the higher education they'll need to get ahead.”

Becerra is seeking civil penalties and is asking that the school be prohibited from engaging in further fraudulent practices in violation of the state Business and Professions Code.

According to Becerra’s complaint, some 68 percent of the students received federal student aid, while most never graduate.

And while Ashford touts the university’s affordability, its online programs can cost much more than other alternatives, including public universities, the lawsuit maintains.

Online bachelors degrees at Ashford are currently expected to cost more than $60,000, including tuition, fees, books and supplies, according to the suit. In contrast, a four-year degree for a California resident attending San Diego State University is under $36,000, the suit says.

The Attorney General’s suit is not the only scrutiny Bridgepoint has faced.

Last year, Bridgepoint was ordered by the federal Consumer Financial Protection Bureau to refund and forgive $23.5 million in private loans made to students for allegedly misrepresenting the amount of their monthly installment payments.

Also last year, Bridgepoint disclosed that the Justice Department was investigating whether the company violated the "90/10 rule, " which forbids for-profit colleges from getting more than 90 percent of their revenue from federally backed student loans.

Ashford has seen enrollment drop in recent years as competition has grown from nonprofit schools offering online degrees. Just six years ago, the school’s enrollment approached 90,000. It is now half that.